MAKODINGO: It has been a good year for KRA

KRA revenue target, collecting Sh1.669 tn against their set target of Sh1.652 tn.

In Summary

• For the first time in eight years, KRA surpassed its revenue target for the Financial year 2020/2021, collecting Sh1.669 trillion against its set target of Sh1.652 trillion

• A core part of its strategy has been a well-choreographed and well-sustained war on tax evasion.

KRA Commissioner-General James Mburu.
KRA Commissioner-General James Mburu.

This financial year, the Kenya Revenue Authority begins to execute its 8th Corporate Plan (2021/22 to 2023/24) themed ‘Revenue Mobilization through tax simplification, technology-driven compliance and Tax Base Expansion’.

Significant progress is already being witnessed on many fronts in a bid to shore up revenue collection.

KRA’s revenue mobilization focus is being achieved through strengthened compliance and enforcement, tax base expansion, risk-based audit, smart intelligence and investigation as well as integrated border management.

With this new strategy implementation cycle combined with a robust system whose capacity we have already seen, it can only get better from here hoping that there will be minimal economic disruptions brought about by 2022 Election-related activities.

This year, KRA has had significant wins both in revenue collection and in sealing loopholes used by individuals and businesses to evade taxes.

For the first time in eight years, KRA surpassed its revenue target for the Financial year 2020/2021, collecting Sh1.669 trillion against their set target of Sh1.652 trillion a trajectory that has been maintained throughout the first quarter with collections to October reaching Sh603.94 billion.

This sustained growth has been witnessed in one of the most difficult economic and social periods in the backdrop of the hardships posed by the Coronavirus pandemic.

Given the difficulties faced by taxpayers during the period, one can only conclude that this performance reflects the strategic and well-executed revenue enhancement initiatives that encompass among others, collaborations on the war on graft through the Multi-Agency frameworks.

A core part of its strategy has been a well-choreographed and well-sustained war on tax evasion.

During the half-year, KRA has dealt with over five high impact cases with a revenue implication exceeding Sh4.3 billion.

The cases, currently being prosecuted include the cases against London Distillers and Purma Holding Ltd, both allegedly evaded tax by non-declaration and non-payment of taxes worth over Sh2 billion respectively.

In the case involving London Distillers Ltd director, Mohan Galot was charged in July following allegations of hatching a scheme to evade taxes including excise duty on locally manufactured spirits, VAT and corporate taxes.  

In the Purma Holdings case, the directors of Purma Holdings Ltd were arrested, charged and released on bond in a dramatic pursuit following a warrant of arrest issued on 8th December 2021 after they failed to appear before the anti-corruption court to answer charges of tax evasion over the period 2014 to 2016.

The other three high net worth cases were; Lego Stores Ltd, tax evasion worth Sh217 million, Yiyuan Trading Company tax evasion case worth Sh80 million and Patiala Distillers Ltd, charged for evading tax by using fake excise stamps.

By the beginning of the financial year 2021/22, KRA had increased its intelligence tactics, tapping information from social media, systems such as the iWhistle and encouraging payments through the M-Service App.

Further, collaborations through Multi-Agency Framework involving agencies such as the National Intelligence Service (NIS), Directorate of Criminal Investigations, Financial Reporting Centre, Ethics and Anti-Corruption Commission, The Ethics and Anti-Corruption Commission (EACC), and Office of The Director of Public Prosecutions, have been instrumental in closing in on tax evasion cases.

This financial year, KRA flagged out some 1, 058 companies and individuals for suspected tax evasion with revenue implications of over Sh132 billion.

The cases ranged from under declaration of sales, inflation of allowances, overstating purchases to claim more Value Added Tax (VAT) and failure to file income tax returns among other offences.     

Against the backdrop of the intense pursuit for tax evasion cases through various avenues including social media, KRA recorded a 60 per cent rise in compliance filing levels.

The KRA Commissioner General is on record saying that the institution had several officers monitoring social media posts and conducting assessments on legitimate properties and compliant taxpayers.

The Authority has also been keen on other sources of data like Kenya Power records, water bills, Kenya Airports Authority on travelers and even data from Kenya Civil Aviation Authority on ownership and use of private planes and helicopters to evaluate compliance levels.

This year, KRA ran several programs such as the Voluntary Tax Disclosure Program (VTDP) and The Alternative Dispute resolution (ADR) that allowed taxpayers to negotiate with KRA on taxes due and settle the disputes amicably and with the former, coming along with a waiver program. Under the VTDP, over 300 applicants applied for relief between January to July, with a total revenue implication of over Sh2.7 billion while the collection stood at Sh1 billion.

In the financial year ended June 2021, ADR resolved 554 disputes bringing in revenue of over Sh31.4 billion compared to the previous year’s Sh9.8 billion.

The incentives applied by KRA to increase compliance levels have generally worked progressively and are expected to lead to better infrastructure, free education, maternal health care, among other public service benefits that enhance the livelihood of taxpayers.                                                                                                     

As the Authority moves forward, it will be transitioning from a Kenya Revenue Authority to Kenya Revenue Service.

The rebranding is intended to usher in an era of customer-oriented service delivery that features a collaboration between KRA and taxpayers to significantly improve compliance levels as the service works with stakeholders to keep them in business even as it enforces revenue compliance.